ECS3567 Development Economics Assignment Sample

• Subject Code : ECS3567
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• Subject Name : Economics

Would the implementation of land expropriation without compensation unlock greater economic growth or damage it further in South Africa? Illustrate your answer by using international experience.

The land ownership issues in one of the key concerns of post-colonial African nations. Currently, South Africa is considering dramatic reforms to its legislature regarding the issue, including a constitutional amendment. Transparency International (n.d.) mentioned that in Sub-Saharan Africa, the land is a crucial resource which sustains livelihoods across the region but is also predisposed to corruption. This corruption leads to increased risk of conflict and food insecurity. In the Johannesburg policy conference, the African National Congress (ANC) again suggested the possibility of land expropriation without compensation. Expropriation, in this sense, is referred to as the act of government claiming the private property as its own against the wishes of owners, supposedly for the overall good of the public (Akinola, 2018). South African government is planning to take the land of African population without compensating them fairly. This paper presents an analysis of land expropriation without compensation in order to assess whether it will unlock greater economic growth in the South African economy or damage it further.

History of Land Acquisition

Considering the historical context for “land acquisition” is easier than reaching a consensus on how to approach the same. The native population of South Africa was coerced into leaving their ancestral lands in the 17th century due to the arrival of Dutch settlers (Jankielsohn & Duvenhage, 2017). Later, the government in apartheid formalized the process with the Group Areas Act which made space for white farmers by forcing the black population to occupy barren lands. The effect of this policy still reverberates in South Africa with black Africans owning just 4% of agricultural land, even though they comprise 79% of the total population. Moreover, since the dawn of its democracy in 1994, the South African ruling party, ANC, has bought land in order to redistribute it to the black population. The current proposal of land expropriation is among such initiatives taken by ANC to expropriate land for public use and to address injustices of the past (Philips, 2016).

Current State of Land Ownership in Africa

The current state of land ownership in Africa is reported in the land audit report which reveals that most of the agricultural and farmland in Africa are owned by individuals from European descent (72%). People from mixed-race own 15%, while the Indian population owns 5% of the total land. Africans only own 4% of African agricultural land (Akinola, 2020). The current land reform policy mentioned three types of reforms, namely, land redistribution, land restitution and land tenure reforms. However, unlike the current proposal, all of these types of reforms require fair compensation for the landholder in case the land is expropriated. Moreover, the official numbers of land restitution suggest that 4,850,100 ha of land is redistributed and the total area restored via restitution claims is of 3,389,727 ha. Furthermore, the corresponding area for which financial compensation was paid is of 2,772,457 ha (Lahiff, 2016). Therefore, 11 million ha have been redistributed; this coupled with farms purchased by the government makes the total land area that was removed from the ownership of white population effectively 15,039 million ha.

Effect of The Proposed Reform on South Africa

It is quite off-putting that the proposal to amend the constitution disregards the real progress which has been made towards land restitution and redistribution. However, this is not the only problem with the proposed policy. Zimbabwe, which took a similar path, experienced serious socio-economic repercussion and finally decided to set up a compensation committee to compensate white farmers. Moreover, Zimbabwean experience suggests that seizing land without compensation results in economic decline and unemployment and loss of revenue from agricultural exports. In 2009, Cousins (2016) estimated that the total loss of Zimbabwe land reform was around $20 billion. The problem is further exacerbated by the fact that African agricultural land is heavily indebted. This presents two scenarios if the compensation is not due to the landowner, will government compensate banks and secondly, if African government covers land debts, then the only difference is that the compensation will be delivered to the banks, rather than the owners.

The key idea is that if the government snatches private property, someone will have to pay, either in terms of loss in future and current revenue, or indirectly, with the protracted economic decline (Pearce, 2017). However, this will only erode the purchasing power of African currency which will lead to a loss in savings and pensions and will destroy the future economic growth of the country. The same view was reflected in the economic discussion panel hosted by the Institute of Race Relations economists who suggested that expropriation of land without compensation will have a direct negative effect on the cost of living, investments and savings. The Banking Association of South Africa (BASA) also warned that the proposed expropriation presents a risk of fiscal damage and a marked reduction in the value of the land based property. The ineffectiveness of the policy in other African states like Tanzania, Zimbabwe and Ethiopia was also mentioned by the US secretary of State Mike Pompeo, who stated that the policy will be disastrous for the economy of South Africa.

In addition to this, the recent report of the High-Level Panel suggests that the failure of 90% of land reforms is due to corruption among state officials and government departments, and the dilution of property rights would eventually lead to adverse impact on agricultural stability, economic growth and food security (Cousins, 2019). The food security will get impacted because thousands of African farmers are leaving their lands because of uncertain land reforms, recurrent droughts and farm murder. Young farmers are migrating out of the country to nations where their skills are in high demand. Therefore, in future, ANC might have to deal with a shortage of farmers with food-producing abilities. One can also perceive a flawed perception of history in the proposal, as it mentions that land reforms are undertaken to correct historical injustices.

Even though it is true that South African history is riddled with injustices, and that the land ownership in South Africa is complex, however, the truth is that the land was acquired in South Africa, not only through conquest but also with the occupation of empty lands and negotiations with black tribes. As Cousins (2019) pointed out, the policy of expropriation without compensation can result in racial tension, not only among blacks and whites but also among personnel from other nations. Hall & Kepe (2017) mentioned that the most significant impact of such a reform will be on the agricultural sector which can seriously damage the competitive advantage of the agricultural sector in the international market, and will ultimately lead to unemployment and poverty. The land is vital for production in the agricultural sector and is ownership is necessary for the sustainability of the sector. The African population is also increasing and enhanced production capacity is important for South Africa to cater for the increasing food demand.

Population and food production in South Africa (Pearce, 2017)

The chart above illustrates the increasing population and the increasing food production which is increasing at a decreasing rate. South Africa is still recuperating from the effect of countrywide drought which reduced the agricultural production by half, and the proposed policy is undoubtedly posing a much bigger threat to food production. Furthermore, as Pearce (2017) reported the policy will most likely change the current trend of high investment in the agricultural sector which further deteriorate the South African economy and will throw the country into a deeper recession.

Conclusion of the Implementation of land Expropriation in South Africa

In conclusion, South Africa will experience a looming socio-economic disaster if the expropriation without compensation (EWC) was pursued with a loss of more than 2.28 million jobs because of reduced economic activity. Moreover, considering the significance of the agricultural sector in the economy, there is a need to improve the transformation of the sector. However, such a transformation should be executed to improve the market position of the sector and to ensure food security and contribution to GDP. Although the proposed expropriation will fast track the transfer of land to the disadvantaged group, it will also result in serious damage to South African agricultural sector and will contribute towards the collapse of its economy, like what happened in Zimbabwe. Rather than focusing on the political push towards the acquisition of land, ANC should concentrate on bringing the 4 million hectare land into production which is being underutilised.

References for Development Economics Assignment 

Akinola, A. O. (2018). Land reform in South Africa: an appraisal. Africa Review, 10(1), 1-16.

Akinola, A. O. (2020). Land reform in South Africa: Interrogating the securitisation of land expropriation without compensation. Politikon, 47(2), 215-232.

Cousins, B. (2016). Land reform in South Africa is sinking. Can it be saved. University of Western Cape, PLAAS.

Cousins, B. (2019). Land reform, accumulation and social reproduction: the South African experience in global and historical perspective. Inkanyiso, 11(1), 1-12.

Hall, R., & Kepe, T. (2017). Elite capture and state neglect: new evidence on South Africa’s land reform. Review of African Political Economy, 44(151), 122-130.

Jankielsohn, R., & Duvenhage, A. (2017). Radical land reform in South Africa–a comparative perspective?. Journal for Contemporary History, 42(2), 1-23.

Lahiff, E. (2016). Stalled Land Reform in South Africa. Current History, 115(781), 181.

Pearce, B. (2017). Land Reform in South Africa: An Uneven Transformation.

Phillips, L. (2016). The current status and future of land reform in South Africa: by invitation. Farmer’s Weekly, 2016(16009), 6-7.

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